📰 - A look into what founders need to know about new CTA reporting requirements
📊 - Data behind the shrinking cash raised per round
🎙️- Podcast w/ Kaustav Das
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New Government Law Could Cost You $500/Day!?
Congress passed the Corporate Transparency Act (CTA), and now qualifying businesses must submit a Beneficial Ownership Information Report or be subject to government fines up to $10,000 or $500/day with potential jail time.
It's a harsh punishment, but we've partnered with BOI Zen to make it easy to get compliant and stay compliant to avoid the government from taking your fresh capital.
You'll never have to worry about getting fined with our friends at BOI Zen
------------------------------------------------------------------------------------------------------------------------------------------------------------CTA Legal Jargon Translated
If you’re a founder, you probably have heard all about the Corporate Transparency Act (CTA). The problem (unless you are a trained lawyer) is that all the articles online are a bunch of legal jargon. We are here to help.
First a disclaimer: This article is intended for general informational purposes only and is not intended as legal advice on any matter. Do not act or refrain from acting on the basis of any of the content in this article. This article is current only as of February 19, 2024 and will not be updated for any changes in law occurring after such date. PLEASE CONTACT AN ATTORNEY FOR SPECIFIC DETAILS.
The legislation was passed in 2021 to fight the use of anonymous shell corporations that are at times used for money laundering, tax evasion, and funding terrorism. In March 2023, the Small Business Administration (SBA) reported that 27,104,006 (81.7%) of small businesses have no paid employees! The new reporting requirements will allow for oversight into who owns and controls these entities.
To summarize the rule in a single sentence: small companies are required to report to the government who has control and ownership.
Now for the details.
Who needs to file?
Almost EVERY startup reading this newsletter will need to comply with these new reporting standards. There are a few exceptions (including certain non-profits and pre-revenue situations). If you are unsure about your specific type of corporate structure, be sure to ask a lawyer.
In general, if you have any of the following, you WILL be required to report to FinCEN:
If you can surpass ALL those conditions, then you will likely be exempt from the reporting requirements.
When do you need to file?
Any corporation started (and registered) before 2024 has the entire 2024 calendar year to complete the filing (no rush yet). However, if your company was started after the New Year, then you have 90 days to complete that filing.
UPDATES! This is critical to know. If there is a change or an error in the filing, it must be updated within 30 days!!! This includes:
Yes, this is the difficult part and crucial for you to stay in compliance with.
What needs to be done?
The filing can be completed on the FinCEN website: https://www.fincen.gov/boi
or you can get compliant with our friends at BOIzen.co
They will ask you for the following information:
For each of the above people you will need:
For your company, you will need:
Another option for individuals is to file their information directly with FinCEN and receive a FinCEN ID number which can be used in the company filings.
What if I don’t comply?
Please do. The punishments are quite harsh. The civil penalties include a fine of $500 for each day that the violation continues (up to $10,000), or criminal penalties, including imprisonment for up to two years.
We strongly encourage our readers to read more about the Corporate Transparency Act and contact an attorney if they have any questions.
Relevant Articles to CTA Reporting
-------------------------------------------------------------------------------------------------------------------------------------------------------------Data Corner
Cash Raised By Stage Drops
Last year we saw the second year of valuations and cash raised per round drop significantly. This chart by Carta helps put numbers to the drop in fundraising. based on our market observations, at Thunder, we believe that this year will likely be a stagnant year (compared to 2023) with less volatile drops, but also no return to easy venture money.
-------------------------------------------------------------------------------------------------------------------------------------------------------------Fundraising Demystified Episode #29 is Live!
Get ready for an episode that's a game-changer for SaaS enthusiasts! Kaustav Das, the visionary CEO and co-founder of Efficient Capital Labs, dishes out the details on revenue-based financing and its magic touch in turbocharging SaaS companies. Here's what's in store: The ins and outs of revenue-based financing and how it pumps cash into companies upfront based on their future earnings. The strategy of widening your capital-raising horizons, avoiding the usual dependence on just a handful of top-notch venture capitalists. Giving your business a makeover by standing out in global markets and building a strong risk assessment system.
Be inspired by his insights into revenue-based financing, where banking data, accounting details, contracts, and VC funding play critical roles. Kaustav's got your back, highlighting the nuances and fees tied to debt facilities and unraveling the mysteries behind effective interest rates. It's like a finance makeover for your business – and Kaustav's the cool guide leading the way!
Meet Kaustav Das, the mastermind with 21 years in risk management, which propelled ECL to secure $10.5 million in equity and a $100 million debt facility. His goal is to revolutionize global finance, removing geographical barriers to capital costs and offering speedy, efficient, and affordable solutions, particularly transforming the business finance scene in emerging markets such as South Asia.
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